The Daily Market Forecast... Growing Up.

Monday’s Blog Results: The long level ran for +46.50 points but the tight stop ended it @ +9.00.

Quick Tip: Growing Up.

You should have a rules-based trading plan with proven edge. If not, stop trading and get one.

Your trade plan is not a static document. It starts that way then grows with you and the changes in the markets you trade. As you gain experience you’ll tweak your trading plan. Some of the rules you have will be dependent on present time market conditions. Think of them as “If – Then” statements.

Yesterday’s winner is a great example. Looking at the chart you’ll see that the volume level held all morning and offered a 46.50-point runner. The suggested stop had you out with something less than 9 points. No bueno.

Your plan may have a stop placement rule that is ineffective when market volatility is extreme. Like now. Our team adjusts the maximum stop distance based on present time volatility. We used data going back several years to optimize these stops.

Rules work until they don’t, though. With the S&P averaging 100+ point ranges the maximum stop rule needs to be reevaluated. You can widen your stops without incurring more risk by lowering your position size. That’s exactly what we’ll do in these conditions. The trade plan evolves. You can adjust it. Just not in the middle of a trade!

Today’s Best S&P Futures Turning Points:

Short Level: Sell 4204.75 stop 4210.50 (consider wider stop 4211.75, less size).

Long Level: Buy 4111.50 stop 4108.25 (consider wider stop 4105.75, less size).

Trade well,

Mike Siewruk

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